Measure 118 promises Oregonians more money, but it could come at a cost

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No other proposal on this November’s ballot has generated the debate — or the cash — of Ballot Measure 118.

With its pledge to redistribute money that now flows to large companies, and put it instead in the hands of Oregonians, the measure offers a simple pitch to a populace smarting from years of high inflation.

One statement in the voters’ pamphlet attempts to hammer home those selling points in hypnotic fashion, repeating phrases like “Pay yourself first,” “Don’t leave $1,600 on the table” and “Do what’s right for your family” five times each.

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Who could refuse such an opportunity? It turns out lots of people.

Oregon elected officials and the state’s most active political groups are a firm “no.” Businesses have kicked in more than $9 million to defeat the measure. Even liberal labor unions and policy groups that favor taxing big corporations are urging Oregonians to turn down the promised cash.

Here’s what you need to know before you cast a vote.

What would the measure do?

Measure 118 would slap a 3% tax on a business’s Oregon sales above $25 million, then divvy up the money raised among Oregon’s more than 4 million residents, no matter their age.

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To qualify, a person needs only to live in Oregon more than 200 days a year. Residents who are born or die in a given year are still eligible for the rebate, even if a child is born on New Year’s Eve.

An analysis by state revenue officials suggests the policy would reap more than $6.5 billion a year, even though it raises taxes on fewer than 2% of businesses. The measure could then send around $1,600 a year to every Oregonian beginning in 2026 — either via tax credits or direct payments.

That $1,600 estimate is a number you’ll hear a lot from Measure 118’s backers in the runup to November. But the truth is, it’s unclear how much Oregonians would receive each year if the measure passes.

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That’s because the measure could impact Oregonians receiving benefits that are based on economic need. It’s possible that yearly checks would reduce or eliminate access to things like the Supplemental Nutrition Assistance Program or Medicaid.

To remedy that, Measure 118 provides for “hold harmless” payments that would recoup Oregonians for the value of any lost benefit. But no one can say how large a piece of the pie those payments might ultimately account for — meaning no one can say how much would go out in the form of rebate checks.

An analysis from the state’s Legislative Revenue Office suggested that the rebate amount in 2026, the first year it is sent out, could range between $1,035 and $1,286. Credits in 2027 could range between $1,442 and $1,790, the analysis found. But even those numbers rely on variables that could shift depending on how the measure is implemented.

At its most basic level, the measure would institute a form of universal basic income, a policy that seeks to alleviate poverty by sending citizens regular, no-strings-attached payments.

The idea has been around for decades, but reached mainstream audiences in 2020 when it was a key platform plank of Democratic presidential candidate Andrew Yang.

While some cities and counties have experimented with basic income policies at the local level, backers say Measure 118 is the most ambitious proposal to stand a chance of passage in recent memory.

Who’s behind it?

Measure 118 was filed by Antonio Gisbert, a Portland resident and former labor organizer who began putting together the idea with a group of friends in 2018.

Two years before, voters had shot down Measure 97, a similar proposal for taxing corporations that would have raised billions for state education and health care. Gisbert and his group decided to take another crack at raising corporate taxes — this time sending money to residents instead of the state.

“Our big spin on it was: Okay, let’s use this money to get every Oregonian a cash rebate,” he told OPB.

Gisbert attempted to land the idea on the ballot in 2020 and 2022, but fell short of collecting enough signatures. He’s also shopped the idea around for years at national conferences attended by fans of universal basic income.

This year, Gisbert found some deep-pocketed supporters. A trio of donors from California kicked in more than $500,000 to pay signature gatherers, ensuring the measure qualified.

Among those benefactors is Josh Jones, an LA-based venture capitalist who made a fortune in cryptocurrency and supports universal basic income. He has given the effort more than $650,000 to date.

Others joined in after Measure 118 landed on the ballot. Dylan Hirsch-Shell, a former Tesla engineer currently running for mayor of San Francisco on a platform that includes basic income, donated $100,000 after hearing Gisbert speak at a conference in July.

“There’s nothing nefarious going on here,” Hirsch-Shell said in an interview with OPB. “I get no personal gain from this measure passing. This is really about the fact that the Oregon Rebate, Measure 118, represents the most exciting opportunity to fight against poverty anywhere in the United States.”

While the emergence of money from California is often a key talking point for opponents, it’s the other side raising big money so far. As of Oct. 1, the yes campaign had reported raising less than 5% of the total raised by the people hoping to defeat Measure 118.

And who’s against it?

Almost everyone, it seems.

As might be expected, corporate interests form the core opposition to Measure 118. Oregon Business & Industry, the state’s largest business group, is running a campaign committee that has raked in more than $9.3 million from some of the most well known corporations in the country.

Oregon-based brands like Nike, Tillamook, and Bi-Mart have cut big checks, alongside Home Depot, Walmart, Kroger, Koch Industries and many more. The money will ensure no mailbox or TV screen is safe from dire warnings about Measure 118.

But it’s far from business opposing the measure. All of the state’s largest labor unions are urging no votes, even though they’ve been fans of past proposals to hike corporate taxes.

So are politicians from both parties, including Gov. Tina Kotek, Treasurer Tobias Read, at least three members of the congressional delegation and the majority of Oregon’s 90 state lawmakers.

Even some progressive policy groups that explicitly support basic income and raising taxes on corporations say they can’t support Measure 118.

“We want to tax rich people and corporations. We want to give struggling families money,” said Daniel Hauser, deputy director of the nonprofit Oregon Center for Public Policy, which advocates for the idea of giving a guaranteed income to low-income Oregonians. “For this measure to come out with the design flaws and issues that it has was really frustrating for us.”

Tax Fairness Oregon, another group that frequently supports corporate tax hikes, put it succinctly: “Measure 118 is a hot mess.”

Why is there so much opposition?

Different groups have different reasons to oppose Measure 118.

Businesses argue that, because the tax is on sales and not profits, large corporations will be forced to pass on the cost to their customers.

“We’re at a time when Oregonians are paying $11,000 more per year to buy the same things they were buying in 2021,” said Angela Wilhelms, president and CEO of Oregon Business & Industry. “A massive tax on sales is simply going to result in higher prices among a bunch of other negative economic consequences.”

Economic modeling by the state’s Legislative Revenue Office, which analyzes tax policy for lawmakers, found Measure 118 could increase prices 1.3% by 2030. The analysis also suggested the measure could slow growth in employment and wages by less than 1%.

Supporters of Measure 118 say they’re dubious the new tax will increase prices. Even if it does, they say, the direct payments to citizens will outweigh the rise in costs.

(Oregon already has a tax that’s based on business sales. In 2019, lawmakers passed the Student Success Act, which raised billions for schools with a new tax on businesses with more than $1 million in Oregon sales.)

Politicians and labor groups are more concerned about the measure’s possible impact on the state budget.

According to legislative attorneys, the measure would send out more in rebates than it ultimately raises in taxes because of its nuanced interplay with the state tax code.

The state’s analysis suggests that could mean Oregon loses out on well over $1 billion in future budget cycles that it otherwise would have used to fund things like schools and health care.

Because the measure doesn’t alter the state constitution, lawmakers could make changes that ensure any such problems are fixed. But that would cut into the size of rebate checks Oregonians receive, and raises the specter that lawmakers could alter the measure in other ways.

Backers of Measure 118 say it was designed to be revenue neutral. They disagree with the state’s legal analysis, but say they would work with lawmakers to ensure the state’s budget doesn’t suffer.

Lastly, some groups simply don’t like the fact that wealthy Oregonians would receive payments under the measure.

“The money should be targeted to families in greatest need,” said Hauser, with the Oregon Center for Public Policy. “We don’t think that every Oregonian should get the same payment regardless of their circumstances.”

What do supporters say?

Gisbert and other chief petitioners say Measure 118 will accomplish two important objectives.

First, they say it creates a more fair taxing structure for corporations, which they argue are too often able to game the state’s tax code to pay lower taxes. They point out that the state’s “minimum tax” structure often results in payments that are a minuscule proportion of a business’s overall sales in the state.

For instance, a business with $76 million in Oregon sales might be required to pay the state $75,000 in excise taxes, less than 0.1% of its sales.

“We ask the people to get their phone out and punch the numbers in,” Gisbert said. “They’re like, ‘Oh my God, you’re right. That is unconscionable.’”

The larger argument is that Oregonians can put the billions of dollars raised by Measure 118 to better use.

Proponents say that yearly checks will slash poverty for the state’s poorest residents, give children and seniors more stable footing, and infuse the economy with new spending.

According to the state’s Legislative Revenue Office, the measure would “significantly reduce or eliminate personal income tax liability” for Oregonians who make less than $40,000 a year. Collectively, those people would go from paying $458 million a year in state taxes to receiving a refund of $550 million under the rebate policy, the office said.

“I see this as a massive redistribution of wealth and also a massive tax credit for Oregonians,” said Stacey Rutland, founder of the Portland-based nonprofit Income Movement, which advocates for basic income policies. “It can be one piece of a very important puzzle of reimagining what our society looks like and how we think our economy should function.”

Rutland, Gisbert and Hirsch-Shell argue that the universality of the policy – millionaires would get checks every year, alongside low-income Oregonians – is necessary. They say inserting an income test will simply create hurdles for those in need.

“Is it worth it to us to potentially have the bottom hundred thousand people who need it most not receive it because we want to make sure that those 10,000 people that are at the top don’t receive it?” said Rutland. ‘It’s a philosophical conversation.”

Mostly, though, proponents are appealing to Oregonians’ desire for more money. As that quirky voter’s pamphlet statement will chant out to anyone filling out a ballot this year:

Could you use $1,600?

Could you use $1,600?

Could you use $1,600?

Could you use $1,600?

Could you use $1,600?

Oregonians will either answer “yes” on Nov. 5, or decide the potential costs of that money are too high.